AlphaGraphics Franchise Sales, Costs & Profits (2023)

Among all commercial printing franchises, Alphagraphics offers a breadth of additional services that makes it unique. It’s also a very profitable business. So if you’re looking for a franchise to start in the marketing and printing industry, you may want to consider Alphagraphics.

Indeed, with an initial investment cost of $335,000 it may not be the most affordable franchise in the industry. Luckily, AlphaGraphics franchises have an average turnover of $1,063,000 and a 15% EBITDA margin, impressive.

In this article we’re looking at AlphaGraphics and its Franchise Disclosure Document to find out how much it (really) costs and how profitable it is. Let’s dive in!

Key stats

Franchise fee	$48,950
Royalty fee	5.0%
Marketing fee	2.5%
Investment (mid-point)	$335,000
Average sales	$1,063,000
Sales to investment ratio	3.2x
Payback period	3 years
Minimum net worth	$400,000
Minimum liquid capital	$100,000

About AlphaGraphics

AlphaGraphics is a chain of marketing service providers with full-service print shops. It offers customized print and marketing solutions to businesses, such as graphic designs, multi-channel marketing campaigns, promotional products, direct mail, packaging, business identity and brand awareness solutions and other visual communications services.

AlphaGraphics was founded by Roger Ford in Tucson, Arizona, in 1970. It began franchising in 1980 and has locations in more than six countries. By 2022, the franchise had 241 franchises in the US and 22 international locations.

AlphaGraphics is owned by MBE Worldwide, headquartered in Lakewood, Colorado, since 2017 and it is a great opportunity for passionate business partners seeking to be part of the printing industry. It offers its franchise owners a variety of designs to choose from when establishing its presence in more locations. These can be converting an existing graphics-related business to an AlphaGraphics business center, acquiring an existing AlphaGraphics center or developing a new business center.

AlphaGraphics franchise pros and cons

The Pros:

• Third-party financing: The franchisor provides its franchisees with third-party financing for startup costs, franchise fees, equipment, inventory and payroll.
• Exclusive territory protection: AlphaGraphics allows franchisees to operate in a protected location. It does not grant any other franchise or operate a related business in the protected area.
• Pre-opening training and support: The franchisor offers its franchisees 40 hours of on-the-job training and a 75-hour classroom training program. It trains them about its business concept, customer service, hiring and training staff and how to successfully launch their centers.
• Marketing and public relations: AlphaGraphics provides its franchisees with result-oriented marketing and advertising channels to help them attract customers and register high retention rates. These include national media, regional advertising, social media, email marketing, local store promotional campaigns and loyalty program apps.
• Site selection and lease negotiation: The franchisor offers its franchisees site selection assistance to help them identify a suitable location. It helps them with the designs, lease negotiations and construction of their centers.
• Multiple pathways: The franchisor offers its franchisees a flexible concept of converting their existing print business into AlphaGraphics without losing their existing target customers, which enables them to grow into multiple units.

The cons:

• No absentee ownership: The franchise does not present passive investment opportunities. The franchisees must be involved in the decision-making and day-to-day operations of their centers.
• Not a part-time business: The franchisees are required to open their stores full-time for at least 40 hours per week.
• Not a home-based business: AlphaGraphics franchises cannot be operated from home or a mobile unit. Franchisees must have an office space, retail facility or warehouse to operate from.

AlphaGraphics franchise costs

You would have to invest on average $335,000 if you chose a franchise business under the New Business Center format (or “pathway” as per the FDD wording), $177,000 if you chose a franchise business under the Acquire and Convert pathway, and $153,000 if you chose a franchise business under the Conversion format instead.

The investment covers all the start-up costs you may need to open an AlphaGraphics franchise business. In addition to a $25,000 – $49,000 initial franchise fee which you must pay to the franchisor, the investment also covers:

• Formulation costs: opening performance package, center development package, leasehold improvements, etc.
• Equipment: digital printing equipment, etc.
• Operating costs: MIS system, CRM system, AgOnline system, finance costs, miscellaneous opening costs, travel and expenses for training, additional funds for 12 months, etc.

Here’s the full breakdown of costs per format:

Startup costs (New Business Center)

Type of Expenditure	Amount
Initial franchise fee	$48,950
Formulation costs	$162,750 – $217,450
Equipment	$0 – $3,600
Operating costs	$69,800 – $119,450
Total	$281,500 – $389,450

Startup costs (Acquire & Convert)

Type of Expenditure	Amount
Initial franchise fee	$48,950
Formulation costs	$9,000 – $47,500
Equipment	$8,700 – $105,955
Operating costs	$19,800 – $65,950
Total	$86,450 – $268,355

Startup costs (Conversion)

Type of Expenditure	Amount
Initial franchise fee	$25,000
Formulation costs	$9,000 – $47,500
Equipment	$8,700 – $105,955
Operating costs	$19,800 – $65,950
Total	$62,500 – $244,405

AlphaGraphics franchise fees

AlphaGraphics franchise revenue

On average, an AlphaGraphics franchise makes $1,063,000 in sales per year. This number is the average sales per franchise center for 229 of the 249 franchised centers that operated in all of 2021.

AlphaGraphics franchise profits

An AlphaGraphics franchise makes $159,000 in profits per year on average (15% EBITDA margin).

Fortunately, AlphaGraphics provides detailed information on the cost structure of its franchised-owned centers. We didn’t invent anything here: we simply used the average revenue per unit ($1,062,831) to which we applied the relevant costs % (as in, percentages of revenue) to calculate EBITDA per franchise.

Profit and loss	Amount	% of sales
Sales	$1,062,831	100%
COGS	$(327,352)	31%
Gross Profit	$735,479	69%
Staff	$(306,095)	29%
Advertising and Marketing	$(28,696)	3%
Building Rent	$(87,152)	8%
Royalties	$(59,519)	6%
Lease and Rental Expense	$(39,325)	4%
Utilities	$(20,194)	2%
Other*	$(35,073)	3%
EBITDA	$159,425	15%

Is Alphagraphics a good franchise investment?

Alphagraphics franchises reach EBITDA margins of about 15% as per the latest FDD.

What does it mean for you as a franchisee if you were to invest an open a new Alphagraphics printing shop?

Assuming a 10% net profit margin, we estimate that Alphagraphics franchises have an excellent 3 years payback on average. This is a great payback, in line with most printing shop franchises.

Indeed, it means that, on average, you would reimburse the initial investment required to open a new Alphagraphics store. This assumes you would choose the most standard franchise format (the New Business Center format at $335,000).

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.